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Technology Stocks : All About Sun Microsystems

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To: Marc Hyman who wrote (53906)4/24/2003 5:01:43 AM
From: technologiste  Read Replies (2) of 64865
 
It makes little economic sense to build PCs (or any product) to last 7-10 years when they become obsolete after only 4-5 years. Every dollar a consumer spends to extend a product's lifetime beyond the point they stop using the product, is simply a dollar wasted. Sure, maybe some people really do want to buy a PC that they can leave in full working condition to their grandchildren. They'll just have to be willing to pay more for it.

So there are two likely conclusions we can make here. The PC industry, with its intense competition among suppliers, provides excellent value because it is continually wringing out unnecessary costs from its supply chain. In contrast, Sun has, at least until recently, been relatively immune (or indifferent to) pricing pressures; and comfortable margins provided little incentive to reduce Cost of Goods Sold.

The other conclusion is that PCs become obsolete in less time than does a typical Sun workstation. Why would this be so? (even assuming roughly the same increase in computational power for both).

The answer is that in the PC industry, the additional computing power usually creates entirely new categories of applications (digital video editing, for example) that slower processors simply could not perform at all. It doesn't matter if you have 1995 Pentium desktop that runs like new. If you want to create DVDs from your home videos, or play the latest Tomb Raider, it's useless to you.

On the UNIX side of the fence, the additional processing power usually means that the same tasks just get done faster. And the fact that a new machine would run "vi" three times then the old one, doesn't always provide a sufficiently compelling a reason to junk the old machine.

Both these points contribute to Sun's current problems. Existing customers want to get the full use out of their old Sun computers (they paid for the over-engineered parts inside them after all). And Sun's inability to provide compelling applications that would exploit their new machines' capabilities, provides little incentive for customers to buy new computers.
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